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INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES
WASHINGTON, D.C.
In the arbitration proceeding between
CANEPA GREEN ENERGY OPPORTUNITIES I, S.Á R.L. AND
CANEPA GREEN ENERGY OPPORTUNITIES II, S.Á R.L.
CLAIMANTS
and
KINGDOM OF SPAIN
RESPONDENT
ICSID Case No. ARB/19/4
DECISION ON THE PROPOSAL TO DISQUALIFY
MR. PETER REES QC
Issued by
Professor Sean David Murphy
Professor Silvina S. González Napolitano
Secretary of the Tribunal
Ms. Ana Constanza Conover Blancas
Date: 19 November 2019
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REPRESENTATION OF THE PARTIES
Representing the Claimants:
Ms. Marie Stoyanov
Mr. Antonio Vázquez-Guillen
Mr. David Ingle
Mr. Pablo Torres
Ms. Patricia Rodriguez
Ms. Agustina Álvarez
Ms. Lucinda Critchley
Ms. Carmen de la Hera
Allen & Overy LLP
Calle Serrano, 73
28006, Madrid
Spain
Representing the Respondent:
Mr. José Manuel Gutiérrez Delgado
Ms. María José Ruiz Sánchez
Mr. Pablo Elena Abad
Mr. Rafael Gil Nievas
Mr. Alberto Torró Molés
Ms. Elena Oñoro Sainz
Mr. Mariano Rojo Pérez
Ms. Gloria María de la Guardia Limeres
Mr. Juan Antonio Quesada
Ms. Ana María Rodriguez Esquivias
Mr. Javier Comerón Herrero
Ms. Eugenia Cediel Bruno
Abogacía General del Estado
Dpto. Arbitrajes Internacionales
c/ Marqués de la Ensenada, 14-16, 2nd floor
28004, Madrid
Spain
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TABLE OF CONTENTS
I. INTRODUCTION................................................................................................................. 1
A. Request for Arbitration and Constitution of the Tribunal .................................................... 1
B. Mr. Rees’ Disclosures .......................................................................................................... 1
C. Respondent’s Proposal to Disqualify Mr. Rees ................................................................... 3
II. THE PARTIES’ SUBMISSIONS ........................................................................................ 4
A. Respondent’s Submissions................................................................................................... 4
1. Applicable Legal Standards .......................................................................................... 5
2. Grounds for Disqualification ........................................................................................ 6
B. Claimants’ Submissions ....................................................................................................... 8
1. Applicable Legal Standards .......................................................................................... 8
2. Grounds for Disqualification ........................................................................................ 9
III. MR. REES’ EXPLANATIONS ......................................................................................... 11
IV. ANALYSIS OF THE UNCHALLENGED ARBITRATORS ......................................... 12
A. Applicable Law .................................................................................................................. 12
1. Applicable Legal Standards ........................................................................................ 12
2. Relationship between Disclosure and Independence.................................................. 15
3. Relevance of the IBA Guidelines ............................................................................... 16
B. Nature of the Challenge Concerning Mr. Rees .................................................................. 16
C. Ground 1: Repeated Appointments and Lack of Proper Disclosure ................................. 16
D. Ground 2: Past and Present Relationship with Claimants’ Counsel ................................. 19
E. Ground 3: Relationship with a Litigation Fund ................................................................ 21
F. Ground 4: Pre-judgment of a Matter at Issue in this Case ................................................ 23
G. Viewing the Disqualification Grounds Collectively .......................................................... 25
V. DECISION ........................................................................................................................... 26
1
I. INTRODUCTION
A. Request for Arbitration and Constitution of the Tribunal
1. On 1 February 2019, Canepa Green Energy Opportunities I, S.á r.l. and Canepa Green Energy
Opportunities II, S.á r.l. (“Claimants”) submitted a Request for Arbitration to the International
Centre for Settlement of Investment Disputes (“ICSID” or the “Centre”) against the Kingdom
of Spain (“Spain” or “Respondent”). The Claimants and the Respondent are hereinafter
collectively referred to as the “Parties.”
2. On 25 February 2019, the Secretary-General of ICSID registered the Request for Arbitration
pursuant to Article 36(3) of the Convention on the Settlement of Investment Disputes between
States and Nationals of Other States (“ICSID Convention”).
3. On 8 May 2019, Mr. Peter Rees QC, a national of the United Kingdom, accepted his
appointment by the Claimants as arbitrator in this case.
4. On 16 May 2019, Professor Silvina S. González Napolitano, a national of Argentina, accepted
her appointment by the Respondent as arbitrator in this case.
5. On 11 September 2019, Professor Sean Murphy, a national of the United States of America,
accepted his appointment by agreement of the Parties as presiding arbitrator. On the same
date, the Secretary-General notified the Parties that all three arbitrators had accepted their
appointments and that the Tribunal was deemed to have been constituted on 11 September
2019, in accordance with Rule 6(1) of the ICSID Rules of Procedure for Arbitration
Proceedings (“ICSID Arbitration Rules”).
B. Mr. Rees’ Disclosures
6. On 8 May 2019, Mr. Rees provided a signed declaration and an accompanying statement
pursuant to ICSID Arbitration Rule 6(2), copies of which were transmitted by the ICSID
Secretariat to the Parties on the same date. In his statement, Mr. Rees disclosed that: (1) he
was co-arbitrator in the arbitration Hydro Energy 1 S.à r.l. and Hydroxana Sweden AB v.
Kingdom of Spain, ICSID Case No. ARB/15/42, where he was appointed upon the nomination
of the investor; (2) he was co-arbitrator in a pending ICC arbitration, where he was appointed
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upon the nomination of clients of Allen & Overy LLP (the “Firm”) and counsel were from the
Australian office of the Firm; and (3) he was until recently co-arbitrator in another
ICC arbitration, where he was appointed upon the nomination of clients of the Firm and
counsel were from the Dutch and UK offices of the Firm. Mr. Rees further stated that neither
arbitration referred to in (2) or (3) above had any connection with the present case and, to the
best of his knowledge, none of the individuals involved from the Firm had any involvement in
this case.
7. On 14 May 2019, the Respondent requested disclosures from Mr. Rees, including with respect
to the following:
i. The arbitrations where Mr. Rees was proposed as arbitrator by the Claimants or
any of its affiliates, including the date of the appointment, the name of the
parties, the amount of the dispute and if the final award was favourable to the
Claimants or its affiliates.
ii. The arbitrations where Mr. Rees was proposed as arbitrator by the Claimants’
attorneys, including cases managed by attorneys formerly working for other law
firms and currently working for the Firm.
iii. Information related to Mr. Rees’ remuneration as a member of the Investment
Committee of the company Harbour Litigation Funding Limited (“HLF” or the
“Company”) and concerning the disputes funded by HLF.
8. On the same date, the ICSID Secretariat transmitted a copy of the Respondent’s request to
Mr. Rees.
9. On 21 May 2019, at the request of Mr. Rees, ICSID transmitted to the Parties a “Disclosure by
the Arbitrator Appointed by the Claimants, Peter Rees QC”, dated 20 May 2019. Mr. Rees
stated in his disclosure, inter alia, that:
i. He had never been proposed as arbitrator by Claimants or any of its affiliates.
ii. He was previously proposed as arbitrator by clients of the Firm on two
occasions. In the first case (handled by the Firm’s Dutch and English offices),
he was appointed in March 2016, the case settled, and no award was made. In
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the second case (handled by the Firm’s Hong Kong and Australian offices), he
was appointed in September 2018 and the case remained pending. Neither case
involved any of the attorneys representing the Claimants in this arbitration.
iii. He had been a member of HLF’s Investment Committee since February 2015
and his total remuneration since then had been GBP 271,169.20. With regard
to disputes funded by the Company, Mr. Rees noted (1) one case between an
investor from a European Union (“EU”) Member State and another
EU Member State (Rockhopper Italia S.p.A., Rockhopper Mediterranean Ltd,
and Rockhopper Exploration Plc v. Italian Republic, ICSID Case No.
ARB/17/14 (“Rockhopper”)), and (2) one case before the English High Court
where the claimant is represented by the Firm.
10. On 30 May 2019, the Respondent requested further disclosures from Mr. Rees concerning,
inter alia, HLF’s documentation related to the Rockhopper case, and all investment arbitration
proceedings in which Mr. Rees had served as arbitrator. On the same date, the ICSID
Secretariat transmitted a copy of the Respondent’s request to Mr. Rees.
11. On 12 June 2019, at the request of Mr. Rees, ICSID transmitted to the Parties a “Further
Disclosure by the Arbitrator Appointed by the Claimants, Peter Rees QC”. In his disclosure,
Mr. Rees stated, inter alia, that: (1) the documents related to the Rockhopper case requested
by the Respondent were confidential to HLF and he did not have access to them; (2) when
funding that case, there had been no discussion at the Company’s Investment Committee in
relation to the issue of an investor from an EU country making an arbitral claim against an EU
State (“intra-EU investment arbitration”); and (3) he had been appointed as arbitrator in
three other investment arbitrations, the information of which was publicly available at the
ICSID website.
C. Respondent’s Proposal to Disqualify Mr. Rees
12. On 11 October 2019, the Respondent proposed the disqualification of Mr. Peter Rees, in
accordance with Article 57 of the ICSID Convention and ICSID Arbitration Rule 9
(the “Proposal”).
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13. On the same date, the Centre informed the Parties that the proceeding had been suspended
until the Proposal was decided, pursuant to ICSID Arbitration Rule 9(6). The Parties were
also informed that the Proposal would be decided by the other Members of the Tribunal,
Professor Murphy and Professor González Napolitano (the “Unchallenged Arbitrators”), in
accordance with Article 58 of the ICSID Convention and ICSID Arbitration Rule 9(4).
14. On 11 October 2019, the Centre transmitted to the Parties and Mr. Rees the procedural
calendar for the submission of written observations on the Proposal, which had been fixed by
the Unchallenged Arbitrators.
15. On 18 October 2019, in compliance with the procedural calendar, the Claimants submitted
their Comments on Respondent’s Disqualification Proposal of Mr. Peter Rees QC
(“Claimants’ Observations”).
16. On 21 October 2019, Mr. Rees furnished his explanations on the Proposal, as envisaged by
ICSID Arbitration Rule 9(3) (“Explanations”).
17. Both Parties were allowed to submit simultaneously additional observations on the Proposal
by 30 October 2019. Respondent’s Further Comments Regarding the Disqualification of
Mr. Rees (“Respondent’s Further Comments”) were received on 30 October 2019. No
additional observations were received from the Claimants.
II. THE PARTIES’ SUBMISSIONS
A. Respondent’s Submissions
18. The Respondent’s arguments on the proposal to disqualify Mr. Rees were set forth in its
submissions of 11 and 30 October 2019. These arguments are summarized below.
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1. Applicable Legal Standards
19. The Respondent considers as applicable law the sources mentioned in Article 38 of the Statute
of the International Court of Justice: international conventions, international custom, and
general principles of law recognized by civilized nations.1
20. First, the Respondent refers to Articles 14 and 57 of the ICSID Convention, which must be
interpreted in accordance with Articles 31 and 32 of the Vienna Convention on the Law of
Treaties (“VCLT”).2 Respondent contends that (1) in light of the three authentic language
versions of the ICSID Convention, Article 14 requires arbitrators “to be both independent and
impartial;”3 and (2) these provisions do not require proof of actual dependence or bias, rather,
as held in the Blue Bank case, it is sufficient to establish the appearance of dependence or
bias.4 The Respondent further argues that, as held in the Burlington and Repsol cases, the
applicable legal standard is an “objective standard based on the reasonable analysis of evidence
by a third party.”5 Moreover, an inference of manifest bias suffices as a basis for
disqualification as long as it is anchored to facts.6 The Respondent also refers to Article 47 of
the European Union Charter of Fundamental Rights and Article 6 of the European Convention
for the Protection of Human Rights and Fundamental Freedoms.7
21. Second, the Respondent argues that the international custom regarding arbitration demands
“(1) impartiality and independence on the arbitrators; and (2) that they can be disqualified
when there is any reasonable doubt about the lack of those qualities.”8 In Respondent’s view,
1 Proposal, ¶¶ 2, 6-8. 2 Ibid., ¶ 20 (referring to Vienna Convention on the Law of the Treaties, 23 May 1969, 1155 U.N.T.S. 331). 3 Ibid., ¶ 16. 4 Ibid., ¶ 70 (referring to Blue Bank International & Trust (Barbados) Ltd v. Bolivarian Republic of Venezuela, ICSID
Case No. ARB/12/20, Decision on the Proposal to Challenge the Majority of the Tribunal Submitted by the Parties
dated 12 November 2013 (Respondent’s Annex 13) (“Blue Bank”), ¶¶ 37 and 58). 5 Proposal, ¶ 71 (referring to Burlington Resources, Inc. v. Republic of Ecuador, ICSID Case No. ARB/08/5, Decision
on the Proposal to Challenge Mr. Francisco Orrego Vicuña dated 13 December 2013 (Respondent’s Annex 14)
(“Burlington Resources”), ¶¶ 65 and 77; and Repsol S.A. and Repsol Butano S.A. v. Argentine Republic, ICSID Case
No. ARB/12/38, Decision on the Proposed Challenge of the Majority of the Tribunal dated 13 December 2013
(Respondent’s Annex 15) (“Repsol”), ¶¶ 71-72). 6 Proposal, ¶ 73. 7 Ibid., ¶ 21. 8 Ibid., ¶ 28. See also ibid., ¶ 79.
6
the use of the term “manifest” in Article 57 of the ICSID Convention cannot be interpreted
inconsistently with international custom that protects the nature of the arbitration.9
22. Finally, the Respondent submits that it is a general principle of international law that
adjudicators must be independent and impartial and that they may be disqualified if “there is
any slight doubt that they are biased.” Furthermore, according to the Respondent, the general
principles of law do not require strict evidence nor require the challenging party to prove actual
bias; rather, bias can be inferred from the facts of the case.10
2. Grounds for Disqualification
23. The Respondent seeks the disqualification of Mr. Rees on four main grounds: (1) repeated
appointments and lack of proper disclosure; (2) past and present relationship with Claimants’
counsel; (3) relationship with a litigation fund; and (4) pre-judgment of a key issue in this
case concerning the Tribunal’s jurisdiction over intra-EU disputes. The Respondent stresses
that these grounds “work together and they should be addressed as a unity.”11
24. First, the Respondent proposes that Mr. Rees be disqualified because he has been appointed
on three occasions (including this case) by the Firm in the past three years for proceedings
where the total quantum exceeds 2 billion Euros, which Mr. Rees failed to disclose in his
initial declaration and in his curriculum vitae. The Respondent argues that this situation falls
within Section 3.3.8 of the IBA Guidelines on Conflicts of Interest in International Arbitration
(the “IBA Guidelines”). The Respondent considers as an aggravating circumstance the
silence of Mr. Rees regarding the quantum of the arbitrations where he was appointed by the
Firm, and it refers to prior decisions finding that multiple appointments of an arbitrator is an
issue relevant to impartiality and independence.12
25. Second, the Respondent considers that Mr. Rees ought to be disqualified since he has a long-
standing history of working closely with the Firm. The Respondent claims that, while
Mr. Rees was the Legal Director of Royal Dutch Shell (“Shell”) from November 2010 to
9 Ibid., ¶ 29. 10 Ibid., ¶¶ 33-35. 11 Respondent’s Further Comments, ¶ 4. 12 Proposal, ¶¶ 37-48; Respondent’s Further Comments, ¶¶ 8-14.
7
April 2014, the Firm was retained by Shell as its main legal service provider to manage Shell’s
largest transactions. The Respondent provides a list of examples of such transactions which,
in its view, show an old and strong mutual trust relationship between Mr. Rees and the Firm,
as it would be highly unusual for the Legal Director not to be involved in the company’s
largest transactions.13
26. Third, the Respondent bases its Proposal on the fact that Mr. Rees was a member of the
Investment Committee of HLF and that a former associate at the Firm, Mr. Dominic Afzali,
is an associate director at HLF. As a preliminary matter, the Respondent submits that the
positions of arbitrator and advisor in a litigation fund ought to be considered incompatible due
to the serious risks of bias they raise. In this case, Mr. Rees failed initially to disclose his
position at HLF and only did so after a disclosure request from the Respondent. The
Respondent considers that such silence must have meant that Mr. Rees was aware of the
incompatibility of advising on which disputes should be funded and then being appointed as
an arbitrator in similar or identical disputes. The Respondent adds that the current position of
Mr. Afzali – who was formerly an attorney at the Firm – as an associate director at HLF
shows, once again, the relationship and interconnection “beyond any reasonable line” between
the Firm and Mr. Rees.14
27. Finally, the Respondent submits that Mr. Rees should be disqualified because he disclosed
that, in the context of HLF considering whether to provide funding in the Rockhopper case,
there was no discussion at the Company’s Investment Committee in relation to the issue of
intra-EU investment arbitration. According to the Respondent, this lack of discussion shows
that Mr. Rees has prejudged a jurisdictional issue that is critical in this case. In other words,
Mr. Rees must have recommended that the Investment Committee finance the Rockhopper
case, which is an intra-EU investment arbitration, and in doing so must have had a clear idea
that a jurisdictional objection to such arbitration was meritless, such that it did not even
deserve to be discussed. Therefore, Mr. Rees cannot be regarded in this case as a neutral party
with no bias or preconceived ideas on any of the issues in dispute. The Respondent also adds
that discussions related to the permissibility of intra-EU investment arbitration predate the
13 Proposal, ¶¶ 49-58; Respondent’s Further Comments, ¶¶ 15-21. 14 Proposal, ¶¶ 59-64; Respondent’s Further Comments, ¶¶ 22-26.
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March 2018 decision of the Court of Justice of the European Union in Slowakische Republik
v Achmea B.V. (Achmea).15
28. In Respondent’s view, the above grounds are obvious, clear and show a manifest lack of
impartiality and independence.
B. Claimants’ Submissions
29. The Claimants’ arguments on the proposal to disqualify Mr. Rees were set forth in their
submission of 18 October 2019. These arguments are summarized below.
1. Applicable Legal Standards
30. The Claimants refer to Articles 14 and 57 of the ICSID Convention and argue that (1) these
provisions contain the legal standard applicable to the disqualification of an arbitrator (which
the Respondent does not dispute); and (2) the term “manifest” contained in Article 57 is
significant as it requires the challenging party to show “evident” or “obvious” bias
(i.e. capable of being discerned with little effort and without deeper analysis).16
31. The Claimants submit that the burden of proof for disqualifying an arbitrator is a heavy one
as Article 57 imposes an objective standard based on a reasonable evaluation of the evidence
by a third party, as opposed to the subjective perceptions or beliefs of the challenging
party.17 The Claimants refer, inter alia, to the Vivendi case, in which it was held that the
challenging party must rely on established facts and not on mere speculation or inference.18
32. In addition, the Claimants oppose what they consider to be an attempt from the Respondent to
deviate from the proper interpretation of Article 57 in order to apply a different legal standard
to that contained in the ICSID Convention. For the Claimants, “the term ‘manifest’ is not an
‘additional requirement’ but rather the applicable standard”.19 Furthermore, in view of the
clear and unambiguous ordinary meaning of Article 57 of the ICSID Convention, the
15 Proposal, ¶¶ 65-69, 82; Respondent’s Further Comments, ¶¶ 27-36. 16 Claimants’ Observations, ¶¶ 5-7, 11. 17 Ibid., ¶¶ 5-7, 14. 18 Ibid., ¶ 9 (referring to Compañía de Aguas del Aconquija S.A. and Vivendi Universal S.A. v. Argentine Republic,
ICSID Case No. ARB/97/3, Decision on the Challenge to the President of the Committee dated 3 October 2001
(Claimants’ Annex 6), ¶ 25). 19 Claimants’ Observations, ¶ 9 (emphasis in the original).
9
Claimants consider that there is no basis for the Respondent to refer to other rules of
international law.20 Finally, while supplementary means of interpretation may be used to
confirm the ordinary meaning of Article 57 of the Convention (as permitted by Article 32 of
the VCLT), they may not be used to change the otherwise clear meaning of Article 57 of the
Convention.21
33. Based on the above, the Claimants request the Unchallenged Arbitrators to apply the standard
for disqualification contained in Article 57 of the Convention and disregard the Respondent’s
submissions requesting that a different standard be applied.
2. Grounds for Disqualification
34. The Claimants submit that the Respondent’s Proposal is devoid of merit and should
be dismissed.
35. First, concerning Mr. Rees’ previous appointments by the Firm, the Claimants argue, inter alia,
that: (1) Mr. Rees disclosed the two prior cases in which he had been appointed by the Firm in
his initial declaration; (2) Mr. Rees did not initially disclose matters of quantum as this is not
required by ICSID Arbitration Rule 6(2); and (3) upon the Respondent’s request, Mr. Rees
disclosed promptly the amount in dispute in the cases where he was appointed by clients of the
Firm. As recognized in previous ICSID cases such as Caratube, Opic and Universal
Compression, which applied Articles 14 and 57 of the ICSID Convention, the mere fact of
holding previous arbitral appointments does not, in itself, indicate a manifest lack of
independence or impartiality on the part of an arbitrator. The Claimants further argue that there
are no valid grounds for disqualification since none of the cases in which Mr. Rees was
appointed by the Firm has any relation to the present dispute and there is no relationship of
dependence or influence between the Firm and Mr. Rees. In addition, the Claimants submit
that the IBA Guidelines are not binding upon the Unchallenged Arbitrators and, even if they
were applied, the case at hand does not fall within the Orange list. Section 3.3.8 of the IBA
Guidelines refers to situations involving more than three repeated appointments within three
20 Ibid., ¶¶ 8-13. 21 Ibid., ¶ 15.
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years, whereas this case only constitutes Mr. Rees’ third appointment, and that appointment
took place more than three years after his first appointment on March 2016 by the Firm.22
36. Second, in Claimants’ view, the arguments regarding the alleged relationship between the Firm
and Shell put forward by the Respondent are speculative assertions that fail to satisfy the
Article 57 requirement of a fact indicating a manifest lack of independence or impartiality.
The Claimants further dispute Respondent’s assertion that the Firm was Shell’s main legal
advisor, given that the Respondent has failed to offer any evidence in support of such assertion
and that there were 11 firms on the panel of legal firms retained by Shell to provide advice
during Mr. Rees’ tenure at Shell. Furthermore, the Claimants submit that no evidence has been
offered by the Respondent that Mr. Rees was personally involved in any Shell transaction in
which the Firm was retained, and confirm that none of the Firm’s team in this case was
involved in any of the Shell transactions cited by the Respondent.23
37. Third, with respect to Mr. Rees’ role on the Investment Committee of HLF, the Claimants first
note that the Respondent has failed to substantiate its claim that providing advice to an entity
which funds arbitral disputes disqualifies an arbitrator in an unrelated dispute involving
different parties. In addition, the Claimants submit that Mr. Rees was not required to disclose
his relation to HLF in his declaration and statement since ICSID Arbitration Rule 6(2) contains
no requirement for an arbitrator to disclose a professional or business relationship that has no
overlap with or connection to the parties to the dispute. In any event, the Claimants consider
that even if Mr. Rees’ connection to HLF was relevant in this case, non-disclosure would not
be sufficient for disqualification. Moreover, as to Respondent’s allegations concerning
Mr. Afzali, the Claimants confirm that he has never been involved in this case and consider
that the Respondent has failed to show why a move by one employee from a large firm to
22 Ibid., ¶¶ 17-29 (referring, inter alia, to Caratube International Oil Company LLP & Mr. Devincci Salah Hourani v.
Republic of Kazakhstan, ICSID Case No. ARB/13/13, Decision on the Proposal for Disqualification of Mr. Bruno
Boesch (Claimants’ Annex 1) (“Caratube”), ¶ 108; OPIC Karimum Corporation v. Bolivarian Republic of Venezuela,
ICSID Case No. ARB/10/14, Decision on the Proposal to Disqualify Prof. Philippe Sands (Claimants’ Annex 17)
(“Opic”), ¶ 53; and Universal Compression International Holdings, S.L.U. v. Bolivarian Republic of Venezuela, ICSID
Case No. ARB/10/9, Decision on the Proposal to Disqualify Prof. Brigitte Stern and Prof. Guido Santiago Tawil
(Claimants’ Annex 18) (“Universal Compression”), ¶ 77). 23 Claimants’ Observations, ¶¶ 30-32.
11
another company means that those two companies would be closely intertwined, as the
Respondent claims.24
38. Finally, concerning Mr. Rees’ alleged pre-judgement of the issue of intra-EU investment
arbitration, the Claimants argue that “[t]he only fact that Mr Rees’ declaration makes clear is
that the ‘intra-EU’ issue was not discussed by the Investment Committee in relation to the
Rockhopper v Italy case. Any speculation relating to the committee’s lack of discussion on the
matter cannot manifestly demonstrate that Mr Rees has prejudged the issue. Spain has not
proved or even asserted that Mr Rees has expressed any opinion on the issue.”25 The Claimants
add that it would be no surprise that there was no discussion of the issue as all investment
tribunals to date that have considered the “intra-EU” jurisdictional objection have rejected it.
Furthermore, the Claimants point out that the Respondent itself has appointed an arbitrator in
another case who had previously issued a decision on the “intra-EU” jurisdictional objection
and, hence, the Respondent must not have considered this to constitute a manifest lack of
independence or pre-judgement by the arbitrator.26
III. MR. REES’ EXPLANATIONS
39. Mr. Rees provided his explanations on 21 October 2019, together with copies of his
disclosures of 20 May and 12 June 2019.
40. With respect to the first ground for disqualification, Mr. Rees noted that his disclosure of
20 May 2019 set out his previous appointments by clients of the Firm and the amounts
involved in the arbitrations in question.
41. Concerning the second ground for disqualification, Mr. Rees noted that: (1) he took over as
Legal Director of Shell on January 2011 at which time Shell had a panel of five law firms that
had been established by the former Legal Director (and included the Firm for transactional
work); (2) at the time he joined, Shell had approximately 720 in-house lawyers in 40 different
jurisdictions who were required to use the panel firms for the work for which those firms had
been appointed on the panel; (3) he conducted a new panel selection procedure, which was
24 Ibid., ¶¶ 33-37. 25 Ibid., ¶ 40. 26 Ibid., ¶ 43.
12
completed in May 2013, that broadened the number of firms on the panel from five to more
than 150 (11 firms, including the Firm, were selected as panel members for particular work
in more than three jurisdictions); and (4) the Legal Director was not involved in law firm
selection for particular transactions, nor was it practical for the Legal Director to do so given
the high volume of contracts and pieces of legislation and arbitration in which Shell was
involved.
42. With regard to the third ground for disqualification, Mr. Rees referenced his prior disclosures
of 20 May and 12 June 2019 in which he had provided details of his involvement with the
Company. In addition, Mr. Rees noted that he was no longer a member of HLF’s Investment
Committee since July 2019. Mr. Rees also confirmed that he had never met, nor had any
communications with, Mr. Afzali.
43. Finally, regarding the fourth ground for disqualification, Mr. Rees referenced his prior
disclosure that there was no discussion at the Investment Committee in relation to the issue
of an investor from an EU country making a claim against any EU State. Moreover, the
decision to fund the Rockhopper case was taken by the Investment Committee in September
2016, while the Achmea decision on the issue of intra-EU investment arbitration was issued
on March 2018, so it could not have been a subject of debate.
IV. ANALYSIS OF THE UNCHALLENGED ARBITRATORS
A. Applicable Law
1. Applicable Legal Standards
44. The relevant treaty for deciding on the Proposal is the ICSID Convention, and in particular
Articles 57 and 14.27 The Unchallenged Arbitrators acknowledge as well the relevance of
Articles 31 and 32 of the VCLT when interpreting a treaty,28 which includes taking into
27 Both Parties cite to the ICSID Convention and ICSID Arbitration Rules. See Proposal, ¶¶ 9-12; Claimants’
Observations, ¶ 5. 28 Spain acceded to the VCLT on 16 May 1972. Luxembourg acceded to the VCLT on 23 May 2003. Although the
VCLT applies only to treaties that are concluded by States after the entry into force of the VCLT as between those
States (VCLT, Article 4), the rules set forth in Articles 31 and 32 are widely accepted as reflecting customary
international law, and have been used as such repeatedly by the International Court of Justice, other international
courts and tribunals, and States since the adoption of the VCLT in 1969.
13
account any relevant rules of international law applicable in the relations between the parties
to that treaty.29 In the context of the Proposal, however, the salient rules are to be found in the
ICSID Convention and the ICSID Arbitration Rules.
45. Article 57 of the ICSID Convention allows a party to propose the disqualification of any
member of a tribunal. It reads as follows:
A party may propose to a Commission or Tribunal the disqualification of
any of its members on account of any fact indicating a manifest lack of the
qualities required by paragraph (1) of Article 14. A party to arbitration
proceedings may, in addition, propose the disqualification of an arbitrator
on the ground that he was ineligible for appointment to the Tribunal under
Section 2 of Chapter IV.
46. The disqualification proposed in this case alleges that Mr. Rees manifestly lacks the qualities
required by Article 14(1) of the ICSID Convention. Accordingly, it is unnecessary to address
disqualification “on the ground that [an arbitrator] was ineligible for appointment to the
Tribunal under Section 2 of Chapter IV.”30
47. Article 14(1) of the ICSID Convention in English provides:
Persons designated to serve on the Panels shall be persons of high moral
character and recognized competence in the fields of law, commerce,
industry or finance, who may be relied upon to exercise independent
judgment. Competence in the field of law shall be of particular importance
in the case of persons on the Panel of Arbitrators.
48. For its part, Article 14(1) of the ICSID Convention in Spanish provides:
Las personas designadas para figurar en las Listas deberán gozar de
amplia consideración moral, tener reconocida competencia en el campo del
Derecho, del comercio, de la industria o de las finanzas e inspirar plena
confianza en su imparcialidad de juicio. La competencia en el campo del
Derecho será circunstancia particularmente relevante para las personas
designadas en la Lista de Árbitros.
49. While the English version of Article 14 of the ICSID Convention refers to “independent
judgment” (and the French version to “toute garantie d’indépendance dans l’exercice de leurs
29 VCLT, Article 31(3)(c). 30 Further, it is noted that the Claimants have not contended that the Respondent’s Proposal was untimely under ICSID
Arbitration Rule 9(1).
14
fonctions”), the Spanish version requires “imparcialidad de juicio” (impartiality of judgment).
Given that all three versions are equally authentic, the Unchallenged Arbitrators agree with
earlier decisions that arbitrators must be both independent and impartial.31
50. The Respondent argues that “Articles 57 and 14 of the ICSID Convention must be interpreted
as an obligation to disqualify an arbitrator if there is ‘any indication’ of its lack of
independence or impartiality”32 or “any doubt” of bias.33 The Unchallenged Arbitrators,
however, are of the view that the word “manifest” in Article 57 of the ICSID Convention
should be understood as meaning “evident” or “obvious,”34 and that it relates to the ease with
which the alleged lack of the required qualities can be perceived. As such, there is a burden
to establish facts showing that the arbitrator is a person who may not be relied upon to exercise
independent and impartial judgment. As for who bears that burden, “the party challenging an
arbitrator must establish facts, of a kind or character as reasonably to give rise to the inference
that the person challenged clearly may not be relied upon to exercise independent judgment
in the particular case where the challenge is made.”35 In this instance, that Party is
the Respondent.
51. As for what is meant by the allied concepts of “independence” and of “impartiality,” the
former concept speaks principally to the absence of external control, while the latter concept
relates to the absence of bias or predisposition towards a party. Both concepts seek to protect
31 Suez, Sociedad General de Aguas de Barcelona SA. v. Argentine Republic, ICSID Cases Nos. ARB/03/17 and
ARB/03/19, Decision on the Proposal for the Disqualification of a Member of the Arbitral Tribunal dated 22 October
2007 (Claimants’ Annex 3) (“Suez”), ¶ 28; OPIC, ¶ 44; ConocoPhillips Company et al. v. Bolivarian Republic of
Venezuela, ICSID Case No. ARB/07/30, Decision on the Proposal to Disqualify L. Yves Fortier, Q.C. dated 27
February 2012 (Claimants’ Annex 16), ¶ 54; Alpha Projektholding GmbH v. Ukraine, ICSID Case No. ARB/07/16,
Decision on Respondent’s Proposal to Disqualify Arbitrator Dr. Yoram Turbowicz dated 19 March 2010) (Claimants’
Annex 7) (“Alpha”), ¶ 36; Tidewater Inc. et al. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/5,
Decision on Claimant’s Proposal to Disqualify Professor Brigitte Stern dated 23 December 2010) (Claimants’ Annex
15) (“Tidewater”), ¶ 37; Burlington Resources, ¶ 65; Abaclat and others v. Argentine Republic, ICSID Case No.
ARB/07/5, Decision on the Proposal to Disqualify a Majority of the Tribunal dated 4 February2014 (Claimants’
Annex 11) (“Abaclat”), ¶ 74; Repsol, ¶ 70. 32 Proposal, ¶ 25 (emphasis in the original). 33 Ibid., ¶¶ 27, 34. 34 See Suez, ¶ 34; Alpha, ¶ 37; Universal Compression, ¶ 71; Blue Bank, ¶ 47; Burlington, ¶ 68; Abaclat, ¶ 71; Repsol,
¶ 73. 35 SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/01/13, Decision
on Claimant’s Proposal to Disqualify J. Christopher Thomas dated 19 December 2002 (Claimants’ Annex 9), ¶ 20.
15
the parties from having arbitrators who are influenced by factors unrelated to the merits of
the case.
2. Relationship between Disclosure and Independence/Impartiality
52. ICSID Arbitration Rule 6(2) sets out the form of the declaration currently required of
arbitrators who accept to serve on an ICSID tribunal. That declaration provides as follows:
To the best of my knowledge there is no reason why I should not serve on
the Arbitral Tribunal constituted by the International Centre for Settlement
of Investment Disputes with respect to a dispute between
___________________and___________________.
I shall keep confidential all information coming to my knowledge as a result
of my participation in this proceeding, as well as the contents of any award
made by the Tribunal.
I shall judge fairly as between the parties, according to the applicable law,
and shall not accept any instruction or compensation with regard to the
proceeding from any source except as provided in the Convention on the
Settlement of Investment Disputes between States and Nationals of Other
States and in the Regulations and Rules made pursuant thereto.
Attached is a statement of (a) my past and present professional, business
and other relationships (if any) with the parties and (b) any other
circumstance that might cause my reliability for independent judgment to
be questioned by a party. I acknowledge that by signing this declaration, I
assume a continuing obligation promptly to notify the Secretary-General of
the Centre of any such relationship or circumstance that subsequently arises
during this proceeding.
53. As has been noted by other tribunals, there is a clear distinction between the disclosure
standards of Arbitration Rule 6(2) and the disqualification standard set forth in Articles 14(1)
and 57 of the ICSID Convention. A failure to disclose a fact that should have been disclosed
is not, of itself, a sufficient reason to find a manifest lack of independence or impartiality.
Rather, non‐disclosure would indicate a manifest lack of such qualities “only if the facts or
circumstances surrounding such non‐disclosure are of such gravity (whether alone or in
combination with other factors) as to call into question the ability of the arbitrator to exercise
independent and impartial judgment.”36
36 Tidewater, ¶ 40.
16
3. Relevance of the IBA Guidelines
54. In the course of their pleadings, the Parties have referred to the IBA Guidelines. While these
guidelines may serve as a reference, the Unchallenged Arbitrators are bound by the standards
set forth in the ICSID Convention. Accordingly, this decision is made based upon the relevant
provisions of the ICSID Convention and ICSID Arbitration Rules.37
B. Nature of the Challenge Concerning Mr. Rees
55. As indicated above, the ICSID Convention’s standard for a challenge, which is found in
Article 57, embodies an objective criterion that imposes the stringent requirement of a
“manifest” lack of the three types of qualities set forth in Article 14(1) – namely the qualities
of “high moral character,” “recognized competence,” and reliability to exercise independent
and impartial judgment.
56. The Respondent does not seek to impugn Mr. Rees’ character, nor does it raise any doubt as
to his legal competence. Instead, the Respondent focuses its attention on the last of the three
qualifications: reliability to exercise independent or impartial judgment.
C. Ground 1: Repeated Appointments and Lack of Proper Disclosure
57. The first ground for disqualification asserts that Mr. Rees lacks independence or impartiality
because he: (1) failed to disclose that he had been previously appointed by the Firm in two,
multi-million-dollar cases, which the Respondent asserts are the “most relevant Arbitration
cases the Firm is running”;38 and (2) has now been appointed in three cases by the Firm.
58. At the outset of his appointment, Mr. Rees disclosed in his Declaration and Statement dated
8 May 2019 that he had previously been appointed by clients of the Firm in two arbitral cases
held under the auspices of the International Chamber of Commerce.39 The Respondent is
correct that the 8 May 2019 disclosure did not specify the quantum in dispute for the two
cases, but Rule 6(2) of the ICSID Arbitration Rules does not require such disclosure. Rather,
Arbitration Rule 6(2) provides the form of the declaration that each arbitrator must sign, which
37 See Blue Bank, ¶ 62. 38 Proposal, ¶ 46; see also ibid., ¶ 48 (“economically most relevant cases”). 39 Mr. Peter Rees Declaration and Statement dated 8 May 2019, p. 2, ¶¶ 2-3.
17
states that an arbitrator shall provide a statement of “(a) [his/her] past and present professional,
business and other relationships (if any) with the parties and (b) any other circumstance that
might cause [his/her] reliability for independent judgment to be questioned by a party.” 40
Mr. Rees disclosed on 8 May 2019 the fact of his two prior appointments relating to the Firm,
thereby alerting the Respondent to those two cases.
59. Further, when the Respondent shortly thereafter queried Mr. Rees about the quantum at issue
in those two cases, Mr. Rees promptly disclosed the amounts in a further Disclosure dated
20 May 2019.41 Although the Respondent asserts that these two cases are the most relevant
arbitration cases that the Firm is running, the Respondent has not presented evidence to that
effect,42 nor explained how the quantum at issue in those cases bears upon Mr. Rees’
reliability to exercise independent or impartial judgment in this case. It is noted that Mr. Rees’
20 May 2019 disclosure indicates that one of those two cases has settled and no award was
made, while the other remains ongoing.43
60. It is the view of the Unchallenged Arbitrators that Mr. Rees’ non-disclosure in his 8 May 2019
declaration of the quantum at issue in his two previous appointments relating to the Firm does
not evidence a manifest lack on his part of independence or impartiality in this case.
61. The Respondent’s first ground for disqualification is also based on the fact that the Firm has
now been involved in appointing Mr. Rees to three cases. Those appointments occurred on
the following dates:
- 11 March 2016 (involving the Firm’s Netherlands and U.K. offices)
- 12 September 2018 (involving its Australian and Hong Kong offices)
- 8 May 2019 (involving its Madrid office)44
40 See supra ¶ 52. 41 Disclosure by the Arbitrator Appointed by the Claimants, Peter Rees, dated 20 May 2019, p. 1 (“Rees 20 May
Disclosure”). 42 At times, the Respondent appears to seek to impose the burden in this proceeding on the Claimants. See
Respondent’s Further Comments, ¶ 17. As indicated supra at ¶ 50, however, the burden of demonstrating that there
exist facts indicating a manifest lack of the qualities required by Article 14(1) rests in this instance with the
Respondent, as the proponent of the Proposal, and not with the Claimants. 43 Rees 20 May Disclosure, p. 1. 44 For the first two appointments, see ibid., pp. 1-2; for the appointment in this case, see Letter of 8 May 2019 from
ICSID to the Parties.
18
62. The Unchallenged Arbitrators agree with the Respondent that multiple appointments of an
arbitrator by a party or its counsel are a factor that must be carefully considered in the context
of a challenge. As the unchallenged arbitrators stated in OPIC:
In an environment where parties have the capacity to choose arbitrators,
damage to the confidence that investors and States have in the institution of
investor-State dispute resolution may be adversely affected by a perception
that multiple appointments of the same arbitrator by a party or its counsel
arise from a relationship of familiarity and confidence inimical to the
requirement of independence established by the Convention.45
63. At the same time, the mere fact that an arbitrator has been appointed twice previously by a
law firm in arbitral cases is not, standing alone, a basis for finding either an actual or an
appearance of a manifest lack of independence or impartiality when appointed in a third
case.46 No objective fact has been presented demonstrating that Mr. Rees’ independence or
impartiality is impacted in this case by the three appointments involving the Firm. For
example, it has not been shown that Mr. Rees is in a relationship of financial dependence to
the Firm based on these three appointments, nor that these cases are related in some way that
would affect Mr. Rees’ decision in this case.47 A relationship of familiarity and confidence
between Mr. Rees and the Firm is not obvious from the fact of the three appointments,
particularly given that the three cases involve different counsel from different offices of the
Firm. Nor do three appointments on this time frame, standing alone, create an appearance of
a manifest lack of independence or impartiality.
64. Although the IBA Guidelines are not applicable in this proceeding, it is noted that
Section 3.3.8 of the IBA Guidelines’ Orange List is not implicated on these facts. The Orange
List “is a non-exhaustive list of specific situations that, depending on the facts of a given case,
may, in the eyes of the parties, give rise to doubts as to the arbitrator’s impartiality or
45 OPIC, ¶ 47. 46 See, e.g., Caratube, ¶ 107 (“Absent any other objective circumstances demonstrating that these prior appointments
manifestly influence his ability to exercise independent judgment in the present arbitration, they do not on their own
justify Mr. Boesch’s disqualification”); OPIC, ¶ 53 (noting two prior appointments involving the same law firm, but
noting that “these two appointments by Respondent’s counsel do not in our view reach the level of multiple
appointments that would by themselves demonstrate the manifest lack of independence required to be established for
a successful proposal to disqualify under the Convention”). 47 See Tidewater, ¶ 62.
19
independence.”48 Section 3.3.8 envisages a situation where “[t]he arbitrator has, within the
past three years, been appointed on more than three occasions by the same counsel, or the
same law firm.”49 Mr. Rees has not received more than three appointments by the Firm within
the past three years; rather, as of the date of Mr. Rees’ appointment in this case, there had
been two such appointments (12 September 2018 and 8 May 2019).
65. In conclusion, the Unchallenged Arbitrators find that Mr. Rees properly disclosed his
appointment on two prior occasions by the Firm and further disclosed the quantum at issue in
those cases upon being requested. Further, the Unchallenged Arbitrators find that such
appointments in conjunction with his appointment in this case do not demonstrate a manifest
lack of independence or impartiality.
D. Ground 2: Past and Present Relationship with the Claimants’ Counsel
66. The second ground for disqualification asserts that Mr. Rees lacks independence or
impartiality because of a past and present relationship with the Claimants’ counsel. The
principal focus of this ground concerns Mr. Rees’s prior service as the Legal Director of Shell.
This service appears to have been from an initial transition period that began in
November 2010 (he formally became Shell’s Legal Director in January 2011) and continued
until April 2014.50
67. During that time, the Respondent identifies six times that Shell used the Firm for advice
regarding mergers and acquisitions or antitrust litigation.51 While the Respondent asserts that
these constituted “the largest transactions conducted under the Challenged Arbitrator’s
tenure,”52 it does not produce any evidence supporting that proposition.
68. At the same time, Shell apparently used multiple law firms throughout this period. According
to Mr. Rees, when he arrived at Shell, there was a panel of five firms that could be used by
Shell employees for particular transactions, which already included the Firm for transactional
48 IBA Guidelines, Part II, ¶ 3. 49 Ibid., § 3.3.8. 50 Explanations, ¶ 5. 51 Proposal, ¶¶ 51-56. 52 Respondent’s Further Comments, ¶ 21.
20
work.53 By the time Mr. Rees departed Shell, a panel of more than 150 firms could be used,
which continued to include the Firm.54 Further, Shell itself employed more than 700 lawyers
who were directly involved in selecting which law firms would be used for particular
transactions.55 According to Mr. Rees, he was not involved in the selection of law firms for
particular transactions throughout this period; it was not practical to do so, as “Shell entered
into approximately one million contracts each year involving annual capital expenditure of
approximately USD 30 billion each year” and had “over 10,000 pieces of litigation and
arbitration [at] any one time.”56 Though the Respondent has expressed doubts in this regard,57
the Respondent has not shown that Mr. Rees was directly involved in any of the six instances
that Shell used the Firm for advice during Mr. Rees’ time as Shell’s Legal Director.58
69. The Respondent also contends that the Claimants’ Observations of 18 October 2019 in
opposition to the Proposal constitutes such a “passionate defense” by the Firm that it raises
serious doubt about the impartiality and independence of Mr. Rees.59 The Unchallenged
Arbitrators do not regard the Claimants’ Observations as outside the bounds of normal
advocacy on behalf of a client, in this instance engaging on the Respondent’s grounds for
disqualification by raising relevant points of fact and law. Nor do the Unchallenged
Arbitrators view Mr. Rees’ Explanations of 21 October 2019 as making any inappropriate
reference to those Observations.60
70. In light of the above, the Unchallenged Arbitrators do not find it has been proved that
Mr. Rees’ position as Legal Director at Shell created an intertwined relationship between him
and the Firm that now manifestly calls into question Mr. Rees’ ability to act independently or
impartially in this case.
53 Explanations, ¶ 6. 54 Ibid., ¶ 9. 55 Ibid., ¶ 7. 56 Ibid., ¶ 8. 57 Respondent’s Further Comments, ¶¶ 18-20. 58 Respondent points to a document produced by the Claimants in which Mr. Rees is quoted in relation to Shell’s
expansion in 2013 of its panel of firms. Ibid., ¶ 19. That document, however, does not indicate that Mr. Rees personally
was involved in the selection of any firm for a particular transaction; references to “we” appear to refer to Shell as an
entity (Claimants’ Annex 20). 59 Respondent’s Further Comments, ¶¶ 5-6. 60 See ibid., ¶ 7.
21
E. Ground 3: Relationship with a Third-Party Litigation Fund
71. The third ground for disqualification asserts that Mr. Rees lacks independence or impartiality
because at the time of his appointment in this case: (1) Mr. Rees was serving on the investment
committee of a third-party litigation fund, HLF;61 (2) he failed to disclose that role in his
Declaration and Statement at the outset of this case;62 (3) HLF had funded a claimant that was
represented by the Firm;63 and (4) HLF had hired an individual from the Hong Kong office of
the Firm.
72. Taking the issue of disclosure first, the Respondent is correct that Mr. Rees did not disclose
in his Declaration and Statement dated 8 May 2019 that he had been serving since February
2015 on HLF’s Investment Committee. When the Respondent shortly thereafter queried
Mr. Rees about his role with HLF, Mr. Rees disclosed the specifics of that role in his
Disclosure dated 20 May 2019.64 Further, Mr. Rees stepped down as a member of HLF’s
Investment Committee in July 2019 and no longer has any involvement with that company.65
73. It is the view of the Unchallenged Arbitrators that Mr. Rees should have disclosed his
connection with HLF as a part of his Declaration and Statement dated 8 May 2019. This third-
party litigation fund appears to be actively involved in funding investor-State disputes, which
is a circumstance that might cause Mr. Rees’ reliability for independent judgment or
impartiality to be questioned by a party. If Mr. Rees had advised for or against the pursuit of
one or more investor-State claims, such advice might well be pertinent as to his views as an
arbitrator in a dispute that involves similar or identical issues of law or fact. Rather than learn
of Mr. Rees’ connection to HLF through disclosure, the Respondent on its own had to discover
such information, leading it to pursue further, valid questions as to the nature of the cases for
which Mr. Rees provided advice.
74. A failure to disclose a relevant fact, however, does not by itself demonstrate a manifest lack
of impartiality or independence.66 Rather, the purpose of disclosure is to inform the parties of
61 Proposal, ¶ 63; Respondent’s Further Comments, ¶ 23. 62 Proposal, ¶¶ 61-62; Respondent’s Further Comments, ¶¶ 24-25. 63 Respondent’s Further Comments, ¶ 13. 64 Rees 20 May Disclosure, p. 2. 65 Explanations, ¶ 12. 66 See supra ¶ 53.
22
a situation that they may wish to explore further in order to determine whether there are
justifiable doubts as to the arbitrator’s independence or impartiality.
75. In this instance, the initial failure to disclose such information is not of sufficient gravity to
merit disqualification. Rule 6(2) of the ICSID Arbitration Rules does not expressly require
disclosure of an arbitrator’s connection with a third-party litigation fund, such that it is
difficult to conclude that Mr. Rees affirmatively sought to conceal such information from
either Party. Further, the Respondent identified the relevant information within a matter of
days after Mr. Rees’ 8 May 2019 Declaration and Statement, allowing it to pursue the matter
through further appropriate queries. Mr. Rees then confirmed and explained his connection
with HLF in his Declaration dated 20 May 2019. As such, the failure of Mr. Rees to disclose
this information in his initial Declaration and Statement does not, standing alone, indicate a
manifest lack of independence or impartiality.
76. The Respondent also argues that the simple fact that Mr. Rees was a member of HLF’s
Investment Committee at the time of his appointment is per se a basis for finding a manifest
lack of independence or impartiality. According to the Respondent, an “impartial and
independent arbitrator cannot, under one hat, [advise] and encourage litigation on disputes,
and, under another hat, adjudicate on those same disputes.”67 The Unchallenged Arbitrators
agree that such “dual hatting” is problematic if, in context, there is a specific connection of
some kind between the person’s role as an adviser and the person’s role as an arbitrator. For
example, providing advice on the merits of a specific claim and then sitting as an arbitrator
concerning that same claim (or a similar claim) would be a basis for finding a manifest lack
of independence or impartiality. The Respondent’s Ground 4, which is discussed below,
advances such an argument. But a person’s involvement in a third-party litigation fund,
standing alone and in light of the current rules, does not demonstrate a manifest lack of
independence or impartiality of that person as an arbitrator for all ICSID cases. Moreover, it
is recalled that, as of July 2019, Mr. Rees no longer has any involvement with HLF.
77. The Respondent further argues that, because HLF has funded a claim where the claimant is
represented by the Firm, this too shows that there is a close connection between Mr. Rees and
67 Respondent’s Further Comments, ¶ 23.
23
the Firm, thereby demonstrating that Mr. Rees lacks independence and impartiality. In his
Declaration of 20 May 2019, Mr. Rees stated that HLF funded a claim for fraud in U.K. courts,
and that the Firm represented the claimant in the U.K. case. According to Mr. Rees, the U.K.
case commenced in 2013 and the decision by HLF to fund the case was taken before Mr. Rees
joined HLF’s Investment Committee.68 Under these circumstances, the Unchallenged
Arbitrators do not see any significant connection between HLF’s funding of such a claim and
Mr. Rees, so as to demonstrate any manifest lack of independence or impartiality on the part
of Mr. Rees in this case.
78. Finally, the Respondent argues that the hiring by HLF of Mr. Afzali from the Firm (its Hong
Kong office), further demonstrates a disqualifying connection between Mr. Rees and the Firm.
In its Proposal, the Respondent asserts that Mr. Afzali “maintains contacts with the Firm and
with the Challenged Arbitrator…”,69 but does not identify any specifics in that regard.
Mr. Rees, however, indicates that he has “never met Mr Afzali nor, to the best of [his]
recollection, had any communications with him.”70 The Firm indicated that “Mr Afzali has
never been involved in this case.”71 After considering these facts, the Unchallenged
Arbitrators do not see the hiring of Mr. Afzali by HLF as demonstrating any manifest lack of
independence or impartiality on the part of Mr. Rees in this case.
F. Ground 4: Pre-judgment of a Matter at Issue in this Case
79. The fourth ground for disqualification asserts that Mr. Rees lacks independence or impartiality
because in September 2016, during the time that he served on the Investment Committee of
HLF, he was part of a decision to fund the Rockhopper case.72 According to the Respondent,
the decision to invest in that claim necessarily meant that Mr. Rees considered and rejected
the possibility that there could be a jurisdictional objection to intra-EU investment arbitration.
68 Rees 20 May Disclosure, pp. 2-3. 69 Proposal, ¶ 64. 70 Explanations, ¶ 13. 71 Claimants’ Observations, ¶ 37. 72 Rockhopper Italia S.P.A., Rockhopper Mediterranean Ltd, and Rockhopper Exploration Plc v. Italian Republic,
ICSID Case No. ARB/17/14, Decision on the Intra-EU Jurisdictional Objection dated 26 June 2019 (Claimants’ Annex
21).
24
As such, the Respondent argues that Mr. Rees “had a clear idea that the intra-EU objection
was meritless,”73 and thus has prejudged an issue that will arise in this case.74
80. According to the Claimants, the Respondent’s position rests on mere speculation as to
Mr. Rees’ state of mind in 2016. Further, the Claimants question the inference that the
Respondent seeks to make by noting that the Respondent itself has acted in a manner that
appears inconsistent with the logic it now invokes.75
81. In a Further Disclosure of 12 June 2019, Mr. Rees stated “that there was no discussion at the
Investment Committee in relation to the issue of an investor from an EU country making a
claim against an EU state.”76 Moreover, in his Explanations of 21 October 2019, he reiterates
that when HLF’s Investment Committee decided to invest in the Rockhopper claim in
September 2016, “there was no discussion at the Investment Committee in relation to the issue
of an investor from an EU country making a claim against an EU state. The Achmea decision
was not given by the ECJ until March 2018, so it could not have been a subject of debate.”77
The Respondent, however, maintains that the potential impermissibility of intra-EU
investment arbitration had been raised by the European Commission and debated in academic
circles in 2015-2016, such that the validity of a jurisdictional objection to intra-EU investment
arbitration must have been a factor in the Investment Committee’s decision, even before
issuance of the Achmea decision.
82. The Respondent has not identified any specific, clear opinion rendered by Mr. Rees as to the
validity or invalidity of a jurisdictional objection to intra-EU investment arbitration.78 Rather,
this ground for disqualification is based on a conjecture as to what Mr. Rees’ must have
believed as of September 2016. The Unchallenged Arbitrators acknowledge the Respondent’s
73 Proposal, ¶ 68. 74 Respondent’s Further Comments, ¶ 35. 75 See supra ¶ 38. 76 Further Disclosure by the Arbitrator Appointed by the Claimants, Peter Rees QC, dated 12 June 2019, p. 1. 77 Explanations, ¶ 14. 78 See Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine
Republic, ICSID Case No. ARB/07/26, Decision on Claimants’ Proposal to Disqualify Professor Campbell
McLachlan, Arbitrator (Claimants’ Annex 22), ¶ 44 (“What matters is whether the opinions expressed by [the
arbitrator] . . . are specific and clear enough that a reasonable and informed third party would find that the arbitrator
will rely on such opinions without giving proper consideration to the facts, circumstances, and arguments presented
by the Parties in this proceeding.”).
25
general point that, in the period before the issuance of the Achmea decision, there was some
debate about the permissibility of intra-EU investment arbitration.79 Yet there is always debate
of one kind or another, at least in academic circles, about many possible decisions that courts
or tribunals might reach in the future. It is not obvious, however, that such pre-Achmea debate
would inescapably lead to an analysis in September 2016 of the issue by the Investment
Committee upon which Mr. Rees served. As such, it is too speculative to assume that Mr. Rees
must have previously considered and rejected the validity of a jurisdictional objection to intra-
EU investment arbitration.
83. Based on these facts, the Unchallenged Arbitrators do not find that Mr. Rees’ involvement in
the decision to fund the Rockhopper case in September 2016 demonstrates his manifest
inability to act independently or impartially in this case.
G. Viewing the Disqualification Grounds Collectively
84. The Respondent has asked that the Unchallenged Arbitrators view the various grounds for
disqualification “as a unity,” rather than as just individual components.80 According to the
Respondent, Mr. Rees maintains “a very close relationship” with the Firm, a relationship that
has “strong and old roots,” to include his repeated appointment as an arbitrator and the links
between the Firm and the litigation fund for which Mr. Rees worked.81
85. The Unchallenged Arbitrators have considered the totality of the points raised by the
Respondent, so as to consider whether, collectively, they demonstrate a manifest lack of
79 The Respondent emphasizes the European Commission’s view in 2015 with respect to the Micula case.
Respondent’s Further Comments, ¶¶ 31-32. Yet, that view may not be directly on point. In 2015, the European
Commission decided that Romania’s payment of the €178 million Micula award, which was rendered by an ICSID
tribunal in 2013, would constitute illegal State aid within the meaning of Article 107 of the Treaty on the Functioning
of the European Union. Specifically, the issue was whether the reinstating of privileges that had been abolished by
Romania in the course of its accession to the European Union (or compensating the investors for the loss of these
privileges) would lead to the granting of new aid incompatible with EU State aid rules. Such a view might not be
regarded as pertinent in the context of the Rockhopper claim (it is noted that on 18 June 2019, the General Court of
the Court of Justice of the European Union overturned the European Commission’s 2015 decision, finding that (1) the
Micula award recognized a right to compensation for the investors existing before Romania’s accession to the EU;
and (2) the Commission was precluded from applying EU State aid rules to this situation, at least with respect to the
pre-accession period.). 80 See Proposal, ¶¶ 44, 75; Respondent’s Further Comments, ¶ 4. 81 Proposal, ¶ 5.
26
independence or impartiality on the part of Mr. Rees in this case. After careful consideration,
the Unchallenged Arbitrators do not view such points as establishing a particular relationship
of Mr. Rees to the Firm that demonstrates a manifest lack of independence, nor as establishing
that Mr. Rees has a particular bias or predisposition, so as to merit disqualification. Nor do
such points considered collectively establish an appearance of a manifest lack of
independence or impartiality.
V. DECISION
86. Having considered all the facts alleged and the arguments submitted by the Parties, and for
the reasons stated above, the Unchallenged Arbitrators reject the Respondent’s Proposal to
disqualify Mr. Rees.
87. The costs of this challenge proceeding are reserved.
___________________________ ___________________________
Professor Sean David Murphy Professor Silvina S. González Napolitano
